InnerWorkings, Inc. (NDAQ:INWK) IPO'd today at $9/share, raising over $95m to help fund its future growth. The printing procurement provider's stock quickly rose to over $10.80 today, representing a gain of over 19% on the day. Is this a stock to be looking at? Although it is difficult to value a stock that has just IPO'd, the company's S-1 filing with the SEC can give us a good idea of what to expect.

InnerWorkings was formed in 2001 to provide an outsourcing platform for printing products though its web portal. Since it began operations in 2002, the company has enlisted over 2,700 suppliers in its database and serves over 1,100 clients (with over 97,000 bids). The company's financials also show strong growth of about 148% per year, with revenues moving from $5m in 2002 to $76.9m in 2005. How is the industry? Well according to their filing:

"Our business of providing print procurement solutions intersects two large and growing industries, commercial printing and business process outsourcing, or BPO. Total shipments in the worldwide commercial print industry were projected to be approximately $367 billion in 2005 and are expected to increase by an average of $8 billion per year through 2009, according to a 2005 Datamonitor global commercial printing industry profile. To become more competitive, many businesses seek to focus on core competencies and outsource non-core business functions, such as print procurement. According to a 2005 IDC global BPO forecast, the worldwide market for BPO is estimated to grow from $422 billion in 2005 to $641 billion in 2009, representing a compound annual growth rate of 11%."

One of the key factors to consider when looking at a new company's potential is its "disruptive" capability. High growth companies typically provide a new technology that disrupts the current market place. For example, Dell used the Internet and commoditization to disrupt the market for PCs. InnerWorkings believes that its technology will disrupt the printing industry by further commoditizing its products and better connecting products with customers (not unlike what Dell did to PCs). In the company's S-1 filing, they stated:

"Our fully-integrated print procurement solution disrupts the traditional print supply chain by aggregating the collective print demand of our clients and greatly increasing the number of suppliers that can efficiently bid for our clients’ print jobs. Our print procurement costs are often 30 to 50% less than the print expenditures historically incurred by our clients, and we believe that we offer a compelling value proposition to our clients by passing on to them a considerable portion of such cost savings. In addition, our solution reduces the amount of internal resources our clients must dedicate to print procurement, accelerates the print procurement process and consistently delivers a high-quality product. We believe that our business model, which is unencumbered by commercial print production assets, offers the first enterprise solution capable of meeting the entire print procurement needs of corporate clients."

One of the major risk factors associated with the business is competition coming into the market - especially given its potential. The two major factors combatting this are the company's proprietary technology and their large supplier network. The company also has a very capable management team and a scalable business model on their side.

Overall, the company is in a solid position fundamentally to disrupt the market for print outsourcing; however, the limited financial data makes it difficult to come up with a valuation for the company, especially given the fact that it has only been in operation since 2002. This company is definitely worth keeping an eye on, however, as we learn more about it in future filings with the SEC.

Tri-Continental Corp (NYSE:TY), a closed-end mutual fund, may have a new board come September 28th if Art Lipson's Western Investment Hedge Partners is able to convince shareholders to nominate their slate of directors. On August 9th, Mr. Lipson sent a letter to shareholders, also filed with the SEC in form 14A, to inform shareholders of his intentions. In this letter, Mr. Lipson gives for reasons for change:

• William Morris, Tri-Continental's Chairman, is named in an investigation by the New York State Attorney General. As you probably know, the New York State Attorney General has determined to commence against Seligman an action for fraud relating to alleged mutual fund timing activities in certain funds managed by Seligman. The Attorney General has alleged that in excess of $80 million was "diluted" from the value of these funds during Mr. Morris's tenure. Moreover, Morningstar, the well-respected rating company for mutual funds, recently rated the Seligman family of open-end mutual funds with an "F" for corporate governance, the lowest possible grade.
  
• Tri-Continental underperformed the S&P 500 index in 12 of the last 15 years. The performance by Seligman as manager during the last 15 years, under Mr. Morris's direction, has been abysmal. During this period, the S&P 500 index returns were 56% higher than Tri-Continental's returns.
  
• Tri-Continental's proxy fails to disclose, (a) the cost to stockholders of the last election; (b) the actual investment performance of Tri-Continental for the first six months of 2006 (which again lags the S&P 500 index); and (c) the fact that its Chairman, William Morris, and its President, Chief Executive Officer and Director, Brian Zino, have been named in the investigation by the New York State Attorney General.
• The Company needs an independent set of eyes to protect our investment and to see to it that Seligman does the job that it is paid to do.

The company fired back by accusing Art of attempting to open-end or liquidate the company. Mr. Lipson insists that this is a scare-tactic, and he has no intention of open-ending or liquidating Tri-Continental, alleging that the company is intentionally misrepresenting his position. In his letter, Art stated:

"I am a fellow stockholder and I am leading a group that has owned Tri-Continental stock since 1999. We care about Tri-Continental's performance certainly as much as anyone else since we are the largest stockholder ... I have listened to stockholder concerns and want to make it clear that, despite statements made by the Tri-Continental Board, my goal is not to open-end or liquidate Tri-Continental. When Tri-Continental tells you to the contrary it is misstating my position. I am committed to improving Tri-Continental to return it to being an excellent company rather than being sub-par."

If Mr. Lipson is successful in overtaking the board, it will be good new to shareholders, who have been forced to suffer through years of sub-par returns under the old board. The new candidates are all well qualified and could help turn around the company.

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Movie Gallery Inc. (NDAQ:MOVI) stock was cut in half recently as they revealed their quarterly financials in their August 10th 8k filing with the SEC. The company said that same-store total revenues for the second quarter of 2006 decreased 4.6% from last year, reflecting a "continued softness in the video rental industry." The company reported a net loss of $14.9m (0.47/share) in the second quarter. This is due to, among other things, a 4.6% drop in same store revenues. The companies balance sheet doesn't look any better - the acquisition of Hollywood Video left the company with a massive debt totaling over $1.1 billion.

While management refused to give guidance, they made it clear that they were working to turn around the company. Meanwhile, the rental movie market may rebound with the recent blockbuster titles leaving the theaters. The Chairman noted:

"Our business continues to be affected by a weak home video release schedule and other industry-wide challenges, but we are making great progress on a number of internal initiatives intended to improve Movie Gallery's financial and operational performance.  We continue to expect a slow late summer, as is typical due to the seasonality of our industry, with gradually improving business conditions beginning in October when the first of several $100 million titles will be released to home video. In the meantime, Movie Gallery is aggressively pursuing opportunities to increase revenues and further improve operating efficiencies.  We have engaged Merrill Lynch to advise us on ways to improve our capital structure as well as Alvarez & Marsal, a leading turnaround management, restructuring and corporate advisory firm.  This great company, together with its dedicated associates and partners, is taking the steps necessary to reposition Movie Gallery for renewed success."

So, is the company worth buying? Probably not at these levels. The company is still riddled with debt, and according to their 8k filing, their "internal initiatives" designed to improve their performance won't be fully realized until late 2007 or 2008. Meanwhile, the company is struggling to deal with its debt-load and declining revenues which may be headed towards a violation of bank covenants in January. Finally, there is no guarantee that the market will improve with competitors like Netflix and Blockbuster who are gaining market share with their online rental programs. Despite these things, the stock is worth keeping an eye on, because a turnaround at these levels could mean big money in the future.

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